US stocks rise on decline in oil, Bernanke talk

Source: Agencies  |   2008-7-9  |     ONLINE EDITION

WALL Street finished sharply higher yesterday as oil prices dropped sharply for the second straight day and investors were encouraged by the possibility of more help for the ailing financial system. The Dow Jones industrials gained more than 150 points, and all the major indexes were up more than 1 percent.

Crude prices tumbled, falling US$5.33 to settle at US$136.04 a barrel on the New York Mercantile Exchange, bringing oil's two-day drop to more than US$9. The average US retail price of a gallon of gasoline remains at a record US$4.108, according to AAA auto club, the Oil Price Information Service and Wright Express.

Speeches by Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and JPMorgan Chase & Co. Chief Executive Jamie Dimon gave the market some reassurance about the financial sector. Investors have been concerned this week about the health of government-backed lenders Fannie Mae and Freddie Mac; the two companies' troubles helped send prices lower on Monday, but they also helped lead the rebound Tuesday.

The market was relieved to hear Bernanke say in a speech the central bank might extend its lending efforts to investment banks; the Fed began allowing the big companies to borrow after the near-collapse of Bear Stearns Cos. earlier this year. At the Federal Deposit Insurance Corp.'s forum on mortgage lending, where Bernanke spoke, Dimon said "the future is very, very bright," but that "I do think we have some very serious issues to face."

Paulson, meanwhile, made an upbeat assessment of the government's efforts to prevent the volume of mortgage foreclosures that touched off the credit crisis last year, although he also said he expects foreclosures to continue.